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Global Agriculture Monthly Yield Hiccup Would Amplify Rebound: BI Agriculture Monthly Downstream demand remains weak outside of biofuels, yet agriculture prices and profits look poised to improve into 2H. With scant cash to support yields, any summer hiccup in US crop growth would accelerate improvement. Strong crush margins look durable, as new capacity increasingly pauses for clearer policy. Longer term, novel crops could get a boost, depending on how 45Z rules are finalized. For more Agriculture research, please visit BI AGRI. |
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We’re proud to be partnering with No Bull on this year’s event as we convene leaders across agriculture, energy, finance, trade and policy for timely conversations on the forces reshaping the industry. Join us July 27–28 in St. Louis for: • Insight-led, unfiltered conversations — on and off stage • Engaging with senior leaders across agriculture, energy, finance, trade, and policy • Anheuser-Busch Biergarten Welcome Event • An all-inclusive Cardinals vs. Cubs suite experience at Busch Stadium |
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Urea Climbs, But Gains Capped by Spread to Ammonia - Alexis Maxwell Farmers buy nitrogen on a unit basis, and urea's current 15-cent spread to ammonia is 1.9x greater than normal as the Strait of Hormuz's closure disproportionately restricts urea trade. When nitrogen exports resume via the strait, we expect urea to correct to a normal spread to ammonia (8 cents per nitrogen unit), which implies $467 a short ton for urea, assuming ammonia is unchanged. The urea-to-ammonia spread has historically traded from negative 2 cents to 37 cents. Farmers switch among nitrogen products depending on whether they are over- or undervalued on a unit basis. Urea's market trades daily, while the ammonia market indicator is the Tampa contract, which settles monthly. European ammonia production currently sets marginal pricing based on TTF LNG. At $15 per MMBtu, a producer can make ammonia at $600 a short ton. |
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Agriculture Industry Event Calendar |
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Farms: Price Slump Stretches |
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June WASDE Only Slightly Tightens Wheat; Yields Under Scrutiny In the second look at 2026-27, the USDA's WASDE report on supply and demand showed a slight trim to wheat balances and virtually none to corn or soybeans. Corn yields in particular still look somewhat optimistic given high farm costs. Based on the pace of export and crush demand, we still see room for upward revisions to demand as the year progresses. The next WASDE report will be released July 10 at 12 p.m. New York time. |
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Hormuz Closure in May Hits 3Q Buyers in India, Brazil, Europe - Alexis Maxwell The fertilizer supply chain extends about two months forward, and May's primary urea buyers include the EU, India and Brazil. Phosphate (DAP and MAP) exported in May is used for EU winter wheat, Brazil's corn and coffee, and India's maize kharif, winter rice, cotton and sugarcane. The US is in the market in late June, purchasing for a use period that runs September-November for corn, wheat and soybean crops. In May, buyers in Canada and Argentina reduce purchases as their demand season ebbs in 3Q. If the Strait stays closed through 3Q, buyers in India, Brazil and the EU will feel the pinch in 4Q. It takes 30-60 days to transit from origin to destination, plus additional time to be shipped inland to farm regions. Publicly traded Mosaic is the largest publicly traded phosphate producer and benefits from higher global prices. |
Average Monthly Global Phosphate Imports |
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Safrinha Harvest Starts Strong; Risks Stay Local - Marina Cavalcante Brazil's safrinha corn harvest is beginning without broad alarms, though localized dryness and rising El Niño risk keep Paraná, Goiás and parts of the Center-South as watchpoints. Harvest reached 3% by June 5, ahead of last year's 2% but below the 3.8% five-year average, with Mato Grosso advancing on firm weather and reporting good yields. Paraná remains mostly in good condition and near harvest start, while Goiás faces severe water stress that could cap yields. Excess rain in southern Brazil could delay fieldwork if El Niño strengthens, but the bigger current risk remains uneven moisture in late-cycle areas across Goiás, Mato Grosso do Sul, São Paulo and Minas Gerais, which accounts for roughly 25% of the 107.9 million metric tons projected for the safrinha season. |
Brazilian Crops (Planting/Harvest) Progress |
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US Soybean Crush Margins Holding Higher - Jason Miner The surge in soy-crush margins looks more like a plateau than a spike, supporting durable upside for Bunge and ADM, which earned more than 50% above this year's consensus during the prior peak. Both have upgraded structurally since then, and this time policy is positive on both sides, unlike past cycles. A short biofuels horizon is curbing new capacity even as it drives demand. Iran-driven energy spikes should keep profitability elevated, suggesting estimates will rise. |
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Large-Ag Sales Fall 19% on Combine Weakness - Christopher Ciolino North American large farm-equipment retail sales (two-wheel drive tractors with at least 100 horsepower and four-wheel drive, plus combines) weakened in May, falling 19%, driven by declines in combines. Large tractors held up better, sliding 10%. Large-ag sales also fell 39% sequentially, more than the typical 25% seasonal drop, though May isn't a key selling month, historically representing less than 8% of annual large-tractor sales. Demand is also seasonally softer from June-August, with each month contributing less than 8% of annual volume. High-horsepower tractor and combine sales are down 14% year to date, tracking better than Deere, CNH and AGCO’s 2026 industry forecast of a 15-20% decline on average. May reinforces our view that large-ag retail demand will fall about 15% this year, near the high end of the forecast range. |
North America Large-Tractor & Combine Retail Sales |
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Beef Packers Poised for Margin Squeeze Amid Global Supply Crunch Tight global beef supply may lift export demand for South American processors through 2026, yet margin upside could remain constrained by compressed cutout spreads. JBS, Marfrig and Minerva can diversify across export markets, but China's gradual retreat -- from safeguards now to self-sufficiency pursuits -- presents mounting structural risk. |
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Tight Beef Market Supply Has No End in Sight - Marina Cavalcante The US cattle herd and calf crops are at historical lows, driving high prices and supply pressure. This means little cost relief is in sight for processors like JBS and Tyson. Limited heifer retention, drought concerns and high costs are delaying rebuilding, indicating supply constraints and higher prices could persist for at least three more years. Regaining access to feeder cattle from Mexico -- about 5% of US supply -- will be critical to provide some relief, though it's unclear when the border will reopen due to New World Screwworm cases. Margins are uneven across the supply chain, with packers under the most pressure -- a trend likely to extend throughout 2026. Still, consumer demand has been surprisingly strong, supporting rising retail prices despite affordability concerns. |
US Beef Cow, Calf Crop Inventories |
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Cocoa Volatility Keeps Pressure on Chocolate Margins - Ignacio Canals Polo Chocolate makers' EPS has declined more than 20% on average since the cocoa turmoil began in early 2024, underscoring how difficult it has been for companies such as Mondelez and Barry Callebaut to manage an input-cost environment defined by price increases and volatility risk. The current cocoa outlook is mixed, with weaker demand and subdued volumes fueling a near-term supply-demand surplus, but structural supply constraints and a higher chance of an El Nino pattern from October could quickly push prices back up if demand improves. Chocolatiers such as Hershey and Lindt face a structural supply-disruption risk, making the operating-model shifts adopted in 2024 and 2025, including increased use of non-cocoa inputs, likely permanent |
Cocoa Price ($ Per Ton), Open Interest |
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Income Trends, Not Share Shifts, Drive Box Demand - Ryan Fox Box demand typically rises about 3% from 1Q to 2Q as tax refunds support spending. Matching 2025 levels would require shipments to increase 4.7% sequentially vs. 2.7% a year earlier. Green Markets' monthly surveys show uneven sentiment among box producers, with modest gains tied mainly to share shifts and only occasional signs of end-market expansion. Historically, a meaningful demand inflection has tracked changes in real personal disposable income, which remains under pressure. Consumption is constrained by inflation and a spending shift toward services and health care, reducing goods-related shipments. Many producers lean on fast-moving consumer-goods customers for volume stability, yet that segment -- 30% of US box demand -- posted limited growth in 2025 as US consumers' real disposable income weakened. |
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Fuels: Light on the Horizon |
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US Ethanol Prices Held by Credit-Backed Supply, Trade and Brazil Ethanol prices are restrained and risks skew slightly negative as new US tax-credit availability sets off runaway supply, while higher domestic blends are locked in Congress and Brazil is subsidizing gasoline prices. Brazil will likely start matching import parity, yet US benchmarks may need to compensate for foreign duties or export rerouting if neighboring countries like Mexico can't offer relief. |
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US Boxed in as Cheapest Ethanol Source - Brett Gibbs US ethanol price inefficiencies risk persistent wholesale weakness as tax credits underpin robust supply. Beyond local blending and gasoline parity limitations, US ethanol faces trade complexities, fragmented global blend targets and foreign-government-subsidized fuel prices. Over 13% of US fuel-ethanol supply is exported and needs to climb as E15 is held up in Congress. Finite Gulf Coast dock access and increased competition for liquid exports raise concerns that could widen the basis inland and along the Gulf to overcome nontraditional transport routes. The US exports 3.7x as much as Brazil, and the pair are 79% of global supply. With ethanol crush margins 5% above five-year seasonal averages, wholesale ethanol could fall if demand doesn’t pick up, despite a record-low price parity of less than 55% gasoline. |
US vs. Brazil and Europe Benchmarks; Crush Margins |
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Tariffs, Protectionism Add Barriers - Brett Gibbs European premiums could advance, particularly if the EU authorizes E20, yet netback uplifts to US producers are limited amid corn-ethanol restrictions, general duties and the Netherland's new emphasis on undenatured ethanol. Local producers have attempted to firm up barriers, especially since the UK's tariff-free annual quota of 370 million gallons to the US shuttered two of the country's three facilities in 2025. The Mercosur deal invites 150 million gallons of non-fuel imports from Brazil and 70 million of fuel -- still only about 38% and 56% of the nation's respective exports. The EU’s standard duty of €102 a cubic meter, or 45 cents a gallon, applies to denatured ethanol, yet most regions require undenatured for fuel use, at €192/m3, or 87 cpg. As of mid-May, US ethanol may need to fall over 10 cpg to pencil into the EU. |
US Gulf FOB + Freight + Duties vs. European Prices |
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Import Hurdles Leave Further Upside for RINs - Brett Gibbs D4 RINs just over $2 look sufficient to support US BBD at full utilization, assuming steady diesel strength, but still must rise to pull net imports as US and Singapore flows to Europe stretch into May. US biodiesel cash operating margins near 50 cents reflect improving Chicago diesel basis and easing methanol costs, letting producers with 45Z challenges to run. Easing diesel prices could also lift RINs, with spot diesel at 55 cents above the 4Q forward curve, or 32 cents per D4 RIN if risks unwind. European biodiesel discounts vs. hydrotreated vegetable oil may push exports to the US, but faces regional blend limits and tariffs. Soybean oil remains tied to palm and Chinese used-cooking oil, adjusted for 25.5% tariffs, transport costs, 45Z, and net of low-carbon fuel standard credits, supporting prices over 70 cents a pound. |
Implied D4 RIN Prices, HOBO Spread, RD Margins |
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